We’ve received a few questions recently about eligibility for the OSBSG, and simply put, you’re probably eligible.

The eligibility requirements are very few:

• A required closure resulting from the most recent government mandated lockdown, effective December 26, 2020.
• Fewer than 100 employees;
• A business number; and,
• A 20% loss in revenue.

The Province is using the months of April 2019 and April 2020 as the baseline for the calculation of this loss. If your business is not in operation during the month of April, you can use a different month in years 2019 and 2020 to show the loss in revenue.

Some businesses such as child care, tutoring and health practitioners do not require an HST number in order to operate as their services are exempt from charging HST. These businesses can apply for a 9-digit Ontario business number without applying for an RT (HST), RP (Payroll) or any of the other available business remittance accounts.

Businesses ineligible are those deemed essential and those “already required to close prior to the introduction of modified Stage 2 measures on October 10, 2020”. These are businesses that were required to close (or required to stay closed) as part of Stage 1 and included museums, galleries and other such attractions.

In other words, most small businesses will be eligible for this grant and if you need it, one can apply here.

The letters have gone out and if you received the Canada Emergency Response Benefit and CRA thinks you shouldn’t have, uh oh.

Here are the rules in case you have received the letter or think that it might be in the post:

Gross Employment Income (including NET self-employment income) must have been at least $5,000 in 2019. Employment income also includes Provincial and Federal maternity and parental benefits.

Gross or self-employment Income does not include:

• Pension income of any kind including RRSP withdrawal and RIF's;
• Disability or social assistance benefits including the child benefit or working income tax benefit or federal supplements;
• Family support payments;
• Worker’s Comp or E.I.;

and

• Investment income

If you need to return your CERB payments, at the time of this writing, the CRA is not issuing fines or penalties if the money is returned by December 31, 2020.

The Tax Free Savings Account was introduced on January 1, 2009. It allows Canadians over the age of 18 to save and invest tax free. Common questions we receive are, “Why do I want a TFSA?”, “How is it different to my regular savings account at my Bank?”, and “What’s this ‘contribution-limit’ stuff about?”.

We’ll start at the top – Why do you want a TFSA?

Simply put, the TFSA is a tax shelter. It’s not your typical “savings” account as one thinks of a savings account at a bank. The TFSA allows one to earn money tax free. This means that any interest, dividends or equity earned are free of Capital Gains tax.

Regressing slightly, Capital Gains tax in Canada is a tax one must pay on earnings above general wages. It is rated at 50% of the value of the earnings and taxed at your current tax bracket. An example is that if you buy a stock at $1.00 and sell it for $2.00, you earned $1.00 in after wages income. Therefore, you will owe the government taxable income on $0.50 in your particular bracket. All in all, capital gains tax is annoying, but not that bad – currently. There has been talk around Canada increasing the Capital Gains tax to upwards of 75%. Folks, lobby your electoral representatives.

As of 2020, the full contribution limit is $69,500 which will be increasing to $75,500 after the increase of $6,000 for 2021. A word of warning: Do not over contribute. If you were 18 in 2009 and have never contributed before, you would have the full room for contribution. If you have contributed before, know that amount and do not go over. The penalties are severe. Log in to your CRA MyAccount or check your latest Notice of Assessment to get that information

Who is a TFSA right for? Should I just do RRSP’s?

A TFSA is great for everyone, full stop. Anytime one can save tax, it’s a good thing. However, we would put forth that a TFSA may be a better option for young investors who aren’t yet in their highest earning years. RRSP’s are meant to lessen one’s taxable income, which is great if you’re earning a lot. If you’re making more along the lines of Canada’s average wage (~$50,000/yr) or less, then a TFSA may be a better choice to learn and earn in the world of investing. That $50k/yr number isn’t a hard a fast amount of course, it’s just an example. A higher earning individual would likely be investing/contributing to an RRSP and a TFSA as well as other potential investment options.

TL;DR

If there is any “good” thing about our tax system in Canada, it’s the TFSA. It is nothing but a benefit to you and you should be using it to its full advantage. Know your contribution limits and don’t go over. Happy investing.

The new CRB program from the Government of Canada can be confusing. Hopefully this will answer some of the common questions we hear and give you some guidance on how to apply. Please go to The CRA CRB Benefits website for all up to date information and for the application process. Additionally, you can call 1-800-959-2019 or 1-800-959-2041.

CERB was $2000 every 4 week period, or $500 per week. CERB was also untaxed, which will sadly be a surprise for some come April 30. CRB will be the same amount, but it will be received every 2 weeks and will taxed at $100 per $1000. Therefore, the CRB will be $900 in after tax income every two weeks.

In its current form, the new CRB will run for a full year, however, if your individual situation continues past 2 weeks, you will need to reapply (just as one did with the CERB) every 2 weeks for a total of 13 periods or 26, 2 week schedules. Also, each eligibility period one is applying for is a period that has already passed. This means that you are applying for benefits where you were not employed for that period, not applying for a period where you will be unemployed. This is a major distinction because in order to be eligible, one must be actively looking for work or be employed, but due to COVID-19, income has become affected.

Self employed individuals are also eligible but there are some caveats. A self employed individual can still work and earn while also receiving the CRB benefit. The catch here is that an individual cannot earn more than $38,000 of self employed income and CRB combined. After the $38k threshold has been exceeded, that person will need to pay back $.50 on every dollar above the $38k. Here's the math:

Example: An self employed individual is on CRB for the entire year ($1000 per 26 2 week periods = $26,000). $38,000 threshold minus $26,000 = $12,000. Therefore, a self employed person can earn up to $12,000 without having to pay back.

There is plenty more information that is both pertinent and available on the CRB Benefits website.

Thanks for reading. The following is our response to COVID-19 and what we have outlined in order to keep you safe. Unfortunately, during these difficult times, we cannot welcome anyone into the office for in-person meetings.

We have two clearly marked boxes at our office entrance. One is for dropping off and the other is for picking up. Should you have large items, the pick up box will accommodate two bankers boxes. The drop off box is locked and secure and is there for the rare occurrence that we are away from the office. It looks like a mailbox and it's pretty fun to use.

When you come to pick up your documents, we will place them in the pick up box shortly before you arrive to limit their exposure to the elements. Our pickup and drop-off boxes will be periodically sanitized throughout the day to help prevent the further spread of COVID-19.

Thank you for your patience and understanding.

As always we can be reached at 705-719-9778 or team@fotherbybusiness.com.